Save Article

EU Notebook

Updated March 1, 2001 12:01 a.m. ET

TIT FOR TAT as Brussels ponders striking back at U.S. trade threats.

The European Union is mulling a response to Washington's warning that it might get tougher in the long-running banana war. The U.S. complaint is that the EU's new banana import rules fail to meet World Trade Organization guidelines, and the threat is that if the rules go into effect, the U.S. will impose a so-called carousel of its existing $191 million (208.3 million euros) in trade sanctions against EU products -- periodically removing some EU goods from its sanctions list and adding others.

A carousel is viewed in Brussels as a tactic to strike fear, not to mention confusion, into the hearts of exporters. So the EU is starting to talk about cooking up a scare strategy of its own, according to people familiar with the thinking inside the Brussels bureaucracy. And there are plenty of options if Washington moves to push the button on the merry-go-round. One: The EU could speed up its massive challenge of U.S. antidumping laws on steel that's in the works at the WTO. Another (which one trade lawyer calls the "nuclear option"): The EU just might publish a detailed list of $4 billion of U.S. exports that it plans to hit with retaliatory sanctions in the so-called Foreign Sales Corporation dispute.

Until now, the EU has been pulling its punches in that trade tiff, publishing only a headline figure for the size of sanctions and avoiding naming any specific products, at least until a final WTO hearing on the matter in May. Early publication of an explicit list would bring the trans-Atlantic trade conflicts to a new ugly level.

European Trade Commissioner Pascal Lamy and new U.S. Trade Representative Robert Zoellick will meet for the first time in their current positions in Washington on March 7.

* * *

EU STEPS DOWN from tough tone toward Ukraine.

The Ukrainian government was taken aback by the tenor of an EU demarche earlier this month faulting Kiev for not investigating President Leonid Kuchma's alleged role in the murder of an opposition journalist with "sufficient transparency and thoroughness." That was strong stuff in diplomacy, and some Ukrainians concluded it meant the union might threaten sanctions. But during a recent visit to Kiev by the Swedish foreign minister and the EU's top foreign policy gurus, the talk was as much about technical bilateral issues, such as intellectual-property rights, as anything else. A spokesman says the presidency remains concerned about the murder -- which has sparked public protests and calls for Kuchma's resignation -- and notes the EU plans to organize a seminar on media freedom in Ukraine later this spring. But some disappointed EU officials say Kiev took away a different message: that Brussels won't bring any meaningful pressure to bear on the government anytime soon.

* * *

ANIMAL-WELFARE LOBBY fights for ban on animal-tested cosmetics.

Animal-rights activists are pressing the European Parliament to stand tough on an EU directive forbidding the marketing, starting in 2002, of any new cosmetics tested on animals. The parliament's health committee votes next month on an amendment to the directive that would water it down, allowing, for example, foreign makeup makers to continue testing overseas. Cosmetics companies are warning that, unless it's amended, the directive will spark a trade dispute. But animal welfare groups, powerful forces in European politics, say they're on track to win a majority in parliament.

* * *

FEED FURY: The Parliament's Agriculture Committee unanimously demands that exact percentages of the ingredients in animal feed be listed on labels or packaging leaflets, defying European governments that would rather feed makers be allowed to fudge. Friedrich-Wilhelm Graefezu Baringdorf, a Green member of parliament and chairman of the agriculture committee, insists that governments embrace the "open declaration" of ingredients originally proposed by the European Commission.

* * *

IN EU WE TRUST?: Britain's latest run-in with foot-and-mouth disease is good news for Eurocrats who've been itching to look effective, and to reinforce the credibility of EU authorities in questions of science and consumer protection. Commission President Romano Prodi, for one, would like people to see the EU as a center of scientific excellence along the lines of CERN, the Swiss atom-smashing outfit. The only problem: convincing EU governments to relinquish their absolute claim on scientific advice.

* * *

CLONE THIS: Despite the public's hysterics regarding genetically modified organisms, Parliament and the EU are both working quietly to promote a more pragmatic approach to biotechnology. Commissioners, and U.S. diplomats, look forward to parliament adapting a coming pro-biotech report from a British conservative member. And European Information Society Commissioner Erkki Liikanen is already working on a response -- a political framework directive on all aspects of biotechnology.

* * *

WET CAT, DRY DOG: European antitrust enforcers will have some fun with their coming review of
Nestle SA's
$10 billion (10.9 billion euro) bid to buy pet-food giant
Ralston Purina Co.
One of the most contentious issues is whether trustbusters should look at pet food as a general competitive category, or separate dog and cat food, and then, of course, dry food and wet food. Nestle argues that pet food is pet food, but some competitors are honing counter-arguments. "Dogs will eat cat food, but cats won't eat dog food," notes one insider fearful that the acquisition could eliminate competition in the distinct "dry dog" and "dry cat" markets.